Last checked at 19 Jun 2008 15:28
Capital & Regional welcomes approval of Mall Fund capital raising
Capital & Regional plc, the co-investing property asset manager, notes the announcement by the Mall Limited Partnership ("the Fund") of the approval by unit holders of the Mall Unit Trust of its £286.3 million open offer. Capital & Regional is pleased that the proposal has been approved with 97% of eligible unit holders voting in favour.
The bulk of the proceeds raised will be used to repay the Fund's existing bank debt in full. The open offer is expected to complete on 27 June.
Capital & Regional voted in favour of the capital raising but decided not to take up its rights. This will significantly strengthen the Group's financial position and allow maximum financial flexibility in the management of all of its assets. Capital & Regional remains committed to the Mall and its franchise both as an investor and as a manager. Its stake in the Mall Unit Trust following this transaction will be 16.7% compared with 24.2% previously. Based on 31 May values, the effect of this dilution and associated costs result in a reduction in pro forma net assets of approximately 60 pence per share.
Capital & Regional welcomes the proposals both to improve the corporate governance structure of the Fund, with the appointment of new independent non-executive directors, and to carry out a review of fees. These matters are expected to be tabled by the end of September. It also considers that the decision now to offer a vote to unit holders in 2011 on whether to extend the Fund beyond 2012, when its bonds are due for repayment, is a logical step.
To ensure that existing unit holders receive the benefit of clawback, Capital & Regional has agreed to bring forward from December 2009 the repayment of approximately £25m in net performance fees arising from the rolling three-year structure of its present fee agreement with the Fund. These will now be paid by the end of this year.
Negotiations are also continuing in relation to asset sales.
Hugh Scott-Barrett, Chief Executive of Capital & Regional, said "This transaction will put the Mall on a more secure financial footing, remove the risk of forced sales and will allow us to focus on maximising fund performance through the active management of the asset portfolio. We are particularly pleased that the vote in favour of the capital raising proposal reinforces investors' support for and endorsement of the Fund".
For further information:
| Maitland | 020 7379 5151 |
| Martin Leeburn | |
| Emma Burdett |